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Pound Swiss Franc (GBP/CHF) Exchange Rate Rises as Swiss Inflation Disappoints

April 2, 2020 - Written by John Cameron

Pound Sterling Swiss Franc (GBP/CHF) Exchange Rate Rises on Weak Swiss Inflation

The Pound Sterling Swiss Franc (GBP/CHF) exchange rate rallied on Thursday, leaving the pairing trading at around 1.2042Fr.

As the number of coronavirus cases in Switzerland increase, the Franc remained under pressure and the pairing rose.

Today’s inflation data revealed that Swiss consumer prices slumped by an annual rate of -0.5% in March. This was in line with expectations, although the second straight month of contraction sending CHF lower.

March’s Consumer Price Index (CPI) also saw the steepest decline since March 2016, putting further pressure on the Franc.

Meanwhile, as the death toll rises in Switzerland, the country’s government outlined further measures to expand on its emergency programme despite to help businesses hit by the coronavirus pandemic.

The Franc was left under pressure as the Swiss National Bank has already given over half of the promised 20 billion CHF set aside as emergency liquidity. With further spending likely needed to support the economy, markets moved away from the Swiss Franc and back towards safe-haven currencies.

Sterling (GBP) Rebounds Amid Coronavirus Panic

The Pound was able to jump to a three-week high against the Euro (EUR), made gains against the safe-haven USD, and rise against the Swiss Franc on Thursday.

GBP rebounded today after crashing in March amid coronavirus panic which sent traders panicking.

Improved risk sentiment boosted Sterling, as oil prices rebounded, while some analysts have noted the recent co-ordinated action from central banks across the world, including the Bank of England (BoE) to ease the scramble for safe-haven US Dollars has provided support.

This has eased the selling pressure on major currencies such as the Pound.

Commenting on this, Societe Generale’s FX strategist, Kenneth Broux noted:

‘Action by central banks to ease dollar supply has helped sterling to return to calmer waters.

‘The oil price rally is also positive at the margin for Sterling as it correlates with improved risk sentiment.’

British Housing Market Grinds to a Halt

Sterling was able to make gains despite data from Nationwide showing that the UK housing market is grinding to a halt.

Following the shutdown of most of the county’s economy, the housing market’s rebound was cut short.

Nationwide showed the recovery which saw house prices rise at the strongest pace in over two years ground to a halt.

Commenting on this morning’s data release, Nationwide’s chief economist, Robert Gardner said:

‘It is important to note that, while we use a full month’s worth of data to generate the index, the cut-off point is slightly before the end of the month. This means that developments following the UK government’s lockdown will not be reflected in these figures.

‘A lack of transactions will make gauging house price trends difficult in the coming months. The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.’

Pound Swiss Franc Outlook: Will GBP Suffer Losses?

Looking ahead to Friday, the Pound (GBP) could suffer major losses against the Swiss Franc (CHF) following the release of UK service sector PMI data.

If Markit reveal the UK’s service sector plummeted further than anticipated into contraction last month, Sterling will slump. This would leave the Pound Swiss Franc (GBP/CHF) exchange rate trading lower at the end of this week’s session.

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